nep-ino New Economics Papers
on Innovation
Issue of 2009‒04‒13
thirteen papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Business and Financial Method Patents, Innovation, and Policy By Bronwyn H. Hall
  2. The Governance and Performance of Research Universities: Evidence from Europe and the U.S. By Philippe Aghion; Mathias Dewatripont; Caroline M. Hoxby; Andreu Mas-Colell; André Sapir
  3. Measuring Eco-Innovation By Arundel, Anthony; Kemp, René
  4. What does it take for an R&D tax incentive policy to be effective? By Mohnen, Pierre; Lokshin, Boris
  5. The Diffusion of Informal Knowledge and Innovation Performance: A sectoral approach By Garcia-Torres, M. Abraham; Hollanders, Hugo
  6. The motivations, organisation and outcomes of university-industry interaction in the Netherlands By Bodas Freitas, Isabel Maria; Verspagen, Bart
  7. Industrial policy from a systems-of-innovation perspective By Edquist, Charles; Chaminade, Cristina
  8. Mr. Woodcroft and the Value of English Patents, 1617-1841 By Alessandro Nuvolari; Valentina Tartari
  9. Building and Blocking: The Two Faces of Technology Acquisition By Grimpe, Christoph; Hussinger, Katrin
  10. Strengthening Agricultural Innovation Capacity: Are Innovation Brokers the Answer? By Klerkx, Laurens; Hall, Andy; Leeuwis, Cees
  11. Habit Formation, Demand and Growth through Product Innovation By Garcia-Torres, M. Abraham
  13. The Internationalization of Science and its Influence on Academic Entrepreneurship By Stefan Krabel; Donald S. Siegel; Viktor Slavtchev

  1. By: Bronwyn H. Hall
    Abstract: Two court decisions in the 1990s are widely viewed as having opened the door to a flood of business method and financial patents at the US Patent and Trademark Office, and to have also impacted other patent offices around the world. A number of scholars, both legal and economic, have critiqued both the quality of these patents and the decisions themselves. This paper reviews the history of business method and financial patents briefly and then explores what economists know about the relationship between the patent system and innovation, in order to draw some tentative conclusions about their likely impact. It concludes by finding some consensus in the literature about the problems associated with this particular expansion of patentable subject matter, highlighting the remaining areas of disagreement, and reviewing the various policy recommendations.
    JEL: G28 K2 L86 O34
    Date: 2009–04
  2. By: Philippe Aghion; Mathias Dewatripont; Caroline M. Hoxby; Andreu Mas-Colell; André Sapir
    Abstract: We investigate how university governance affects research output, measured by patenting and international university research rankings. For both European and U.S. universities, we generate several measures of autonomy, governance, and competition for research funding. We show that university autonomy and competition are positively correlated with university output, both among European countries and among U.S. public universities. We then identity a (political) source of exogenous shocks to funding of U.S. universities. We demonstrate that, when a state's universities receive a positive funding shock, they produce more patents if they are more autonomous and face more competition from private research universities. Finally, we show that during periods when merit-based competitions for federal research funding have been most prominent, universities produce more patents when they receive an exogenous funding shock, suggesting that routine participation in such competitions hones research skill.
    JEL: H0 H52 I2 I23 I28 O3
    Date: 2009–04
  3. By: Arundel, Anthony (UNU-MERIT); Kemp, René (UNU-MERIT)
    Abstract: In this paper we offer a discussion of eco-innovation and methods for measuring it. Eco-innovation is a new concept of great importance to business and policy makers, covering many innovations of environmental benefit. Past research and measurement activity primarily focused on pollution control and abatement activities or on the environmental goods and services sector. We argue that eco-innovation research and data collection should not be limited to such environmentally motivated innovations, but should encompass all products, processes, or organizational innovations with environmental benefits. Attention should be broadened to include innovation in or oriented towards resource use, energy efficiency, greenhouse gas reduction, waste minimization, reuse and recycling, new materials (for example nanotechnology-based) and eco-design. Research should cover the drivers, patterns, and benefits of eco-innovation for each of these applications, since these factors are likely to differ. For measuring eco-innovation, no single method or indicator is likely to be sufficient. In general, one should therefore apply different methods for analyzing eco-innovation – to see the “whole elephant” instead of just a part. More effort should be devoted towards direct measurement of eco-innovation outputs using documentary and digital sources to complement the current emphasis on innovation inputs such as R&D or patents. Innovation can also be measured indirectly from changes in resource efficiency and productivity. These two avenues are underexplored and should be given more attention in order to augment our rather narrow knowledge basis.
    Keywords: eco-innovation, environment, innovation, measurement, indicators, data needs
    JEL: O13 O31 Q55
    Date: 2009
  4. By: Mohnen, Pierre (UNU-MERIT); Lokshin, Boris (UNU-MERIT)
    Abstract: While in 1996, 12 OECD countries offered R&D tax incentives, in 2008 this number increased to 21. Most countries have opted for level-based instead of incremental R&D tax incentives. This paper takes a critical look at how the effectiveness of R&D tax incentives has been assessed in recent evaluations. Whether based on structural models estimating a price elasticity of R&D or on treatment evaluation methods, most studies estimate the cost effectiveness ratio or additionality. If the cost effectiveness ratio is greater than 1, or firms to more R&D than before, the policy is considered to be effective. A more proper net welfare evaluation of this policy should also include administration, compliance and transfer costs, the marginal burden of taxation, as well R&D externalities and the indirect effects on innovation and productivity. The net welfare gain is shown to be sensitive to a certain number of parameters that are not always estimated with great precision. In particular, the transfer cost or deadweight loss associated with level-based tax incentives is shown to depend on the size of the firm, or more precisely its ex-ante R&D level. We report on the success of a past policy changes in the Netherlands and simulate the effect of various parameter changes in the existing Dutch R&D tax incentive scheme. We show that introducing marginal changes in the schemes’s parameters has little impact of increased R&D spending. The policy is more effective for small firms than for large firms. We end with a discussion of the pros and cons of level-based versus incremental R&D tax incentives.
    Keywords: R&D tax credits, R&D, tax credits, policy evaluation, cost-benefit analysis
    JEL: O32 O38 H25 H50
    Date: 2009
  5. By: Garcia-Torres, M. Abraham (UNU-MERIT); Hollanders, Hugo (UNU-MERIT)
    Abstract: This paper tries to quantify the effect of diffusion of informal knowledge on the innovative performance of European firms using data derived from the 3rd Community Innovation Survey. When firms are asked whether or not they have introduced new products or processes, they were also asked to which degree such innovations were developed in-house. These degrees were captured by the CIS variables InPdtW and InPcsW. These variables ranged from 1 (Mainly done by the firm) to 3 (Mainly done by other enterprises). The focus of this paper is to investigate the impact of diffusion of informal knowledge. We combine the previous variables with another variable which reflects firms that were not doing any formal collaboration with other institutions. If an innovative firm has no formal collaboration arrangements and the innovation has not been done mainly by the firm, then diffusion of informal knowledge is considered to be the main driver of the innovation. The idea is that informal channels are accessible to all firms. This paper tries to quantify the impact of such flows of knowledge on firms’ innovation performance. To do this, a two step procedure is followed: -In a first step, a latent variable for diffusion of informal knowledge is defined and estimated based on firms’ characteristics. -In a second step, the latent diffusion variable is introduced as a regressor in a probit/tobit model.
    Keywords: Knowledge flows, innovation, dynamic equations, sectoral innovation, CIS
    JEL: C34 O32 O31
    Date: 2009
  6. By: Bodas Freitas, Isabel Maria (Ecole de Management Grenoble, DISPEA Politecnico di Torino); Verspagen, Bart (UNU-MERIT, University of Maastricht)
    Abstract: This paper aims at analysing the impact of institutional and organizational factors on bridging industrial and university motivations for collaboration, as well as on the content, management and outcome of this relationship, in the Netherlands. In particular, we explore which type of projects, set up under specific industrial and university motivations, are more likely to face institutional barriers related to technology, market and organisational incentives frameworks. Moreover, we analyse the impact of technology transfer offices, research sponsoring, part-time professorships, and patenting on aligning university and industry motivations towards collaboration. To proceed empirically, thirty in-depth cases of successful university-industry knowledge transfer are analysed.
    Keywords: university-industry interaction, innovation cooperation
    JEL: O31 O32
    Date: 2009
  7. By: Edquist, Charles (CIRCLE at Lund University); Chaminade, Cristina (CIRCLE)
    Abstract: This paper focuses on the systems-of-innovation (SI) approach and its policy implications. It introduces the topic by briefly reviewing the emergence, development, and diffusion of this approach and, then, spells out the constituents, activities, and boundaries of the SI approach. On this basis, the paper discusses the reasons for public policy intervention in the innovation process and the division of labour between private and public actors in carrying out SI activities. In this context, the paper argues that the notion of optimality is irrelevant in an innovation system context and it discusses the importance of uncertainty for innovation policy and the inevitable selectivity of such policy. A brief survey of the strengths and weaknesses of the SI approach rounds off the paper and points to avenues for future research.
    Keywords: systems of innovation; innovation policy; industrial policy
    JEL: B52 O31 O38
    Date: 2009–04–07
  8. By: Alessandro Nuvolari; Valentina Tartari
    Abstract: We examine the potentialities of a new indicator for measuring the value of English patents in the period 1617-1841. The indicator is based on the relative visibility of each individual patent in the contemporary technical and legal literature as summarized in Bennet Woodcroft's Reference Index of Patents of Invention. We conclude that the indicator provides a reasonable proxy for the value of patents and that it can be usefully employed to shed light on the timing and nature of innovation during the Industrial Revolution. In particular, our indicator offers a suitable reconciliation between the patent records evidence and the Crafts-Harley view of the Industrial Revolution.
    JEL: N73 O34
    Date: 2009–03–30
  9. By: Grimpe, Christoph; Hussinger, Katrin
    Abstract: Gaining access to technological assets and patents, in particular, has long been a major motive and objective for firm acquisitions. On the one hand, patents are used as a building instrument for the acquirer’s technology portfolio. On the other hand, patents can be attractive because of their strategic value as a bargaining chip, e.g. in licensing negotiations. This is especially the case if patents have the potential to block competitors. Drawing on transaction cost economics and the resource-based view of the firm, we analyze the importance of these two faces of technology acquisition for the valuation of a target firm. Empirical evidence for European firm acquisitions in the period from 1996 to 2003 indicates that the price paid by an acquirer for a target increases with the building and blocking potential of the target’s patents, especially if building and blocking patents are in technology fields related to the acquiring firm’s patent portfolio. Our results have implications for the technology strategy of the firm, in that M&A transactions may considerably impact technology markets, increasing the concentration of key technologies.
    Keywords: Firm acquisitions, technology, building patents, blocking patents
    JEL: G34 L20 O34
    Date: 2009
  10. By: Klerkx, Laurens (Communication and Innovation Studies Group, Wageningen University); Hall, Andy (UNU-MERIT, LINK); Leeuwis, Cees (Communication and Innovation Studies Group, Wageningen University)
    Abstract: This paper examines the role of innovation brokers in stimulating innovation system interaction and innovation capacity building, and illustrates this by taking the case of Dutch agriculture as an example. Subsequently, it reflects upon the potential role of innovation brokers in developing countries’ agriculture. It concludes that innovation brokerage roles are likely to become relevant in emerging economies and that public or donor investment in innovation brokerage may be needed to overcome inherent tensions regarding the neutrality and funding of such players in the innovation system. The Dutch experience suggests that innovation brokers need to be contextually embedded, and are unlikely to become effective through a centrally-imposed design. Hence, we conclude that stimulating their emergence requires a policy that supports institutional learning and experimentation. In the evaluation of such experiments, it is important to note that innovation brokers tend to play intangible roles that are not easily captured through conventional indicators.
    Keywords: Agriculture, Developing Countries, The Netherlands, Innovation Broker, Neutrality, Institutional Learning, Context-Specific, Innovation Systems, Capacity Strengthening, Agricultural Extension
    JEL: N54 Q13 Q16 Q18
    Date: 2009
  11. By: Garcia-Torres, M. Abraham (UNU-MERIT)
    Abstract: Growth theory has mainly focused on process innovation, either through an increase in quality of the product or a reduction on the cost. The main contributions in growth theory that includes product innovation has been done in the Dixit and Stiglitz framework. This framework works with oversimplifying restrictions on the demand side: Preferences of consumers are assumed to be constant and equal for all goods. This paper introduces vertical and horizontal differentiation in final goods. Goods are different in their habit formation parameters. Innovation is not the normal reduction in costs but an increase in the capacity to satisfy consumers’ needs. Growth in this model is defined as the growth of the final value added.
    Keywords: growth, product innovation, technical change, consumption
    JEL: O47 E21 D11 O31 M37
    Date: 2009
  12. By: Raquel Ortega-Argilés (European Commission, JRC-Institute for Prospective Technological Studies (IPTS) – Knowledge for Growth Unit (KfG), Industrial Research and Innovation (IRI)); Rosina Moreno (Faculty of Economics, University of Barcelona)
    Abstract: Based on the Knowledge Production Function framework given by Griliches (1979), we slightly modify it so that the innovative output depends upon a set of factors related to the firm internal characteristics and are influenced by the environment. Specifically, regarding the firm internal determinants the effect of the concentration of the ownership, the composition of the boards of directors and the effect of the nature of the ownership (foreign and public) are analyzed. Additionally, in order to capture the determinants of the environment in which the firm operates other variables concerning the internationalization of market, the agglomeration economies and the regional knowledge externalities are also considered. In order to assess the impact of these determinants on the number of patents and models of use awarded by the firm, the discreteness of the latter variable has to be taken into account. We apply Poisson and Negative Binomial models for a more comprehensive evaluation of the hypothesis in a panel of Spanish manufacturing firms. The results show patenting activity is positively favoured by being located in an environment with a high innovative activity, due to the existence of knowledge spillovers and agglomeration economies.
    Keywords: Knowledge production function, patents, R&D, ownership, regions
    Date: 2009–04
  13. By: Stefan Krabel (Max Planck Institute of Economics, Jena); Donald S. Siegel (University at Albany, SUNY); Viktor Slavtchev (Max Planck Institute of Economics, Jena)
    Abstract: We conjecture that the mobility of academic scientists increases the propensity of such agents to engage in academic entrepreneurship. Our empirical analysis is based on a survey of researchers at the Max Planck Society in Germany. We find that mobile scientists are more likely to become nascent entrepreneurs. Thus, it appears that citizenship and foreign-education are important determinants of the early stages of academic entrepreneurship.
    Keywords: Academic Entrepreneurship, Human Capital, Scientific Mobility, Knowledge Transfer, Immigrant Entrepreneurship
    JEL: L26 O31
    Date: 2009–04–02

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